Canada’s Prime Minister Mark Carney has unveiled his first federal budget, proposing billions in new spending to counter the economic impact of US tariffs while significantly increasing the deficit and outlining transformative economic reforms.
The budget, titled ‘Canada Strong,’ was presented in the House of Commons on November 4, 2025, by Finance Minister François-Philippe Champagne, projecting a deficit of C$78.3 billion for the 2025-26 fiscal year—more than double previous forecasts. This move responds to US President Donald Trump’s tariffs, including a broad 35% levy on Canadian goods and specific duties on sectors like steel and aluminum, which have already triggered job losses and investment uncertainty. Champagne emphasized the need for ‘bold and swift action’ in a time of profound change, warning that restrained spending would eliminate vital social programs and hinder Canada’s future.
To bolster productivity and resilience, the budget allocates C$280 billion over five years for initiatives such as upgrading ports and trade infrastructure, with the goal of doubling exports to non-US markets within a decade. It also includes direct financial support for firms affected by tariffs and aims to attract C$1 trillion in private investment by reducing regulatory hurdles and improving competitiveness. Rebekah Young of Scotiabank noted that while these measures could boost long-term investment, they may not immediately address cost-of-living concerns for Canadians, and achieving the investment target will require substantial follow-through.
Defence spending receives a significant boost, with nearly C$82 billion allocated over five years to meet NATO’s 2% of GDP commitment, reflecting an increasingly dangerous global landscape. Additionally, the budget proposes nearly C$1 billion to advance artificial intelligence integration in government and other sectors, positioning Canada as a leader in emerging technologies. These investments are part of a broader strategy to make the country more attractive for business amid trade disruptions.
However, the budget also entails sacrifices, including a 10% reduction in the federal workforce by 2029—resulting in about 40,000 job losses through changes to retirement rules rather than firings. Other cuts include scaling back international aid to pre-pandemic levels and slightly lowering immigration targets over the next three years, with significant reductions in student visas to stabilize new admissions. Carney had warned Canadians ahead of the budget about these trade-offs, framing them as necessary for long-term economic strength.
Politically, the budget’s passage is crucial for Carney’s minority Liberal government. Shortly after its release, Conservative MP Chris d’Entremont announced he was crossing the floor to join the Liberals, narrowing the government’s minority and reducing the opposition votes needed for approval. Opposition parties have criticized the plan; Conservatives decry the increased deficit and lack of affordability measures, while the Bloc Québécois and New Democrats have expressed reservations about public sector cuts.
The budget is set to be debated in Parliament for four days, with a vote scheduled for November 17. Failure to pass it could trigger a federal election. Despite the larger deficit, the government maintains that Canada has the lowest deficit-to-GDP ratio in the G7, arguing that these investments are essential for navigating global trade uncertainties and securing economic prosperity in the years ahead.